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Risk Framework

Zyfai provides an independent risk assessment layer for DeFi yield strategies. Every pool available to Zyfai Agents has been assessed across three dimensions:

  • Protocol-level risks
  • Collateral-level risks
  • Pool-level risks

This framework governs which opportunities your Agent can access and how they are continuously monitored after integration.

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Live risk data: risk.zyf.ai

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Strategy Tiers​

Pools are classified into two risk-tiered strategies. Return expectations are averaged across market cycles on an approximate 3-year time horizon.

Conservative​

Target native return (excluding incentives): 5–8%

The Conservative strategy allocates exclusively to the most liquid, battle-tested pools and protocols. It prioritizes capital preservation above all else.

Key constraints:

  • USDC only: no collateral swaps, no dual-LP positions requiring stablecoin swaps
  • No principal tokens (PT)
  • Protocol must have $100M+ TVL and 36+ months live
  • Pool TVL ≥ $1M, liquidity ≥ $500K

Collateral thresholds:

Asset TypeMin. BackingAdditional Requirements
Stable assets>100.3%No depeg (≥0.5%) in 6 months
ETH / Offchain volatile>125%Market cap > $100M
Alts>140%Liquidity > $25M, 7d vol > $1M

Aggressive​

Target native return (excluding incentives): 8–14%

The Aggressive strategy includes all Conservative criteria with relaxed thresholds, opening access to higher-yielding opportunities with riskier collaterals and principal tokens.

Key differences from Conservative:

  • Riskier collaterals and principal tokens (PT) are permitted
  • Protocol must have $25M+ TVL and 12+ months live
  • Pool TVL ≥ $250K, liquidity ≥ $100K

Collateral thresholds:

Asset TypeMin. BackingAdditional Requirements
Stable assets>100%No depeg (≥5%) in 6 months
BTC / ETH / Offchain volatile>115%Market cap > $30M
Alts>130%Liquidity > $3M, 7d vol > $300K

For more on how strategies are selected and customized, see the Yield Strategies page.

Whitelisting Process​

Before any pool is made available on Zyfai, it must pass through a structured whitelisting process covering the protocol, its collaterals, and the individual pool.

Protocol Whitelisting​

Each new protocol undergoes a comprehensive due diligence review.

Technical Risks

  • Smart contracts audited by multiple renowned audit firms
  • Audit less than 1 year old, or code unchanged since last audit
  • No unresolved critical findings
  • Use of tier-1 oracles (e.g. Chainlink, Pyth): no reliance on single DEX TWAP
  • Exploit history reviewed; zero exploits in the past 12 months

Operational Risks

  • Team has a relevant DeFi track record
  • Active development (GitHub commits in the last 30 days)
  • Multisig with ≥5 signers, ≥3 required: no single individual can rug
  • Governance token distributed (top 10 holders < 50%)

Economic Risks

  • Source of yield assessed: sustainable fee-based models preferred over temporary incentives
  • Can exit 100% of position with < 3% slippage
  • Pool is permissionless: no withdrawal queue, no NAV calculation
  • For lending pools: exposure limited to whitelisted collaterals only

Lindy Effect

Protocols must meet minimum age and TVL thresholds corresponding to the target strategy tier:

  • Conservative requires 36 months live and $100M TVL
  • Aggressive requires 12 months live and $25M TVL.

Collateral Whitelisting​

Each collateral asset accepted in a lending pool is independently assessed. Data sources include CoinGecko, Chainlink/Pyth price feeds, GeckoTerminal/DexScreener, and official protocol documentation.

The assessment covers backing ratios, price stability (depeg history), market capitalisation, onchain liquidity, and trading volume. Specific thresholds differ by strategy tier as outlined above.

Pool Identification​

New pool opportunities are identified and reviewed on a daily basis. Each pool must meet the TVL and liquidity thresholds of its target strategy and must be hosted on an already-whitelisted protocol with whitelisted collaterals.

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Continuous Monitoring​

Once a pool is live on Zyfai, it enters a continuous monitoring pipeline. These checks run automatically and are visible on the Risk Dashboard.

Collateral Monitoring​

All collateral whitelisting criteria are re-evaluated on a monthly basis. In addition, the following events are continuously monitored:

  • Stablecoin depeg events: real-time detection of peg deviations for both base assets and collateral stablecoins in lending pools
  • New collateral additions: when a curator whitelists a new collateral, it is automatically flagged and reviewed against listing criteria (liquidity, peg stability, backing)

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Pool Monitoring​

  • APY stability: flagged if the level falls outside 3σ of the 14-day rolling mean
  • TVL stability: flagged if there is a 40% drawdown from the 30-day high
  • Combined APY + TVL check: flagged if APY deviates by 2σ and TVL draws down 20% simultaneously
  • Utilisation and kink levels: monitors interest rate model state to flag pools approaching the kink (sudden APY drops, potential withdrawal difficulty)
  • Liquidity vs. Zyfai TVL: ensures Zyfai's exposure remains a safe fraction of available pool liquidity
  • Strategy classification review: ongoing assessment that each pool is correctly categorized as Conservative or Aggressive

Vault Structure Review​

For protocols with hierarchical vault structures (e.g. Morpho curators), the complete allocation hierarchy is mapped: which underlying markets each vault allocates to, which collaterals are accepted, and how capital flows through the structure. This is reviewed continuously as curators adjust allocations.

Automated Rebalancing Controls​

Zyfai uses Smart Accounts to allocate capital across whitelisted pools. Every rebalancing action is gated by the following automated checks.

Concentration Limits​

  • User deposit < 25% of pool TVL
  • Aggregated Zyfai TVL < 30% of pool TVL
  • Zyfai TVL < 85% of pool remaining liquidity
  • Protocol-specific cap on aggregated Zyfai TVL

Yield and Stability Gates​

  • APY must exceed the previous opportunity by at least 0.1%
  • Slippage cost must be compensated by at least 3 days of APY
  • APY stability check (3σ band over 14-day window)
  • TVL stability check (no 40% drawdown from 30-day high)
  • Combined APY + TVL check (2σ deviation and 20% drawdown simultaneously)

Interest Rate Simulation​

Before any capital move, Zyfai simulates the expected APY based on the specific pool’s interest rate model, accounting for the impact of the deposit on utilization rates. This prevents allocating to pools where the deposit itself would push utilization past the kink and collapse the yield.

Pool Status​

The rebalancing engine checks the live/not-live status of each pool via the Risk Dashboard before any allocation.

Risk Alerts​

Zyfai provides real-time risk intelligence notifications covering the following events:

  • User deposit exceeds 25% of a pool's TVL
  • User deposit exceeds 85% of a pool's remaining liquidity
  • APY instability detected
  • TVL instability detected
  • Depeg event on the base asset
  • Depeg event on a collateral stablecoin (lending protocols)
  • New collateral accepted by a curator (lending protocols)